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Managerial Accounting by John Wild 7th Edition-Test Bank

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  • ISBN-10 ‏ : ‎ 1260247880
  • ISBN-13 ‏ : ‎ 978-1260247886

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Managerial Accounting by John Wild 7th Edition-Test Bank

Managerial Accounting, 7e (Wild)
Chapter 8 Flexible Budgets and Standard Costs

1) Standard costs can be used by management to assess the reasonableness of actual costs incurred.

2) Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

3) Standard costs are preset costs for delivering a product or service under normal conditions.

4) When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate.

5) Management by exception means studying industry standards to define normal conditions.

6) While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

7) A cost variance is the difference between actual cost and standard cost.

8) A budget performance report shows budgeted amounts, actual amounts, and differences between budgeted and actual amounts.

9) A cost variance can be further separated into the quantity variance and the price variance.

10) When computing a price variance, the price is held constant.

11) When computing a price variance, the quantity is held constant.

12) Within the same flexible budget performance report, it is impossible to have both favorable and unfavorable variances.

13) Cost variances are ignored under management by exception.

14) Management by exception means that managers focus on the most significant differences between actual costs and standard costs.

15) Variable budget is another name for a flexible budget.

16) Fixed budget performance reports compare actual results with the results expected under a fixed budget.

17) Another name for a static budget is a variable budget.

18) Fixed budgets are also known as flexible budgets.
19) A flexible budget is based on a single predicted amount of sales or other activity measure.

20) A fixed budget is based on a single predicted amount of sales or other activity measure.

21) A variable or flexible budget is so named because it only focuses on variable costs.

 

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